Industry, advocates split over FTC's personalized pricing proposal

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(The Center Square) – The Federal Trade Commission's proposed enforcement policy statement on personalized pricing drew nearly 3,700 public comments before its docket closed Sept. 25, with retail and tech industry groups raising concerns about a proposal that says companies using personalized pricing should disclose when a price is personalized, the basis for it and what data was used, while consumer advocates argued it does not go far enough.

Industry groups including the National Retail Federation, the Retail Industry Leaders Association, FMI-The Food Industry Association and NetChoice, along with the Software & Information Industry Association, filed comments raising concerns about the proposed disclosure requirements. Consumer advocacy groups, including the Consumer Federation of America, Consumer Reports and Oregon Consumer Justice, also weighed in.

Industry groups raised concerns that the FTC's proposed disclosure requirements could sweep in ordinary loyalty and promotional pricing. NRF did not make a spokesperson available but pointed to published material arguing state personalized-pricing laws "could unintentionally restrict loyalty programs, customer rewards programs and other initiatives retailers use to compete."

FMI said targeted promotions "help retailers compete for budget-conscious shoppers and reduce food waste by directing time-sensitive discounts to customers most likely to purchase perishable products," Chief Public Policy Officer and General Counsel Stephanie Harris told The Center Square.

NetChoice went further, saying the FTC lacks authority to require broad disclosure without new legislation.

"The FTC should withdraw the Statement, finish its ongoing 6(b) study, and make sure any future policy is based on evidence about what's actually happening in the marketplace," Patrick Hedger, the group's director of policy, told The Center Square.

NetChoice cited the Supreme Court's 2024 Loper Bright decision, which overturned Chevron deference and held that courts must exercise independent judgment in deciding whether an agency has the statutory authority it claims.

Consumer advocates counter that disclosure alone won't change the underlying practice. Lee Hepner, senior legal counsel for the American Economic Liberties Project, said in a statement that the FTC "is squandering its authority to stop this practice and instead places the burden on consumers to protect themselves."

Sen. Josh Hawley, R-Mo., raised concerns about companies' use of personalized pricing during an Aug. 5 Senate Judiciary subcommittee hearing on AI surveillance pricing. Sens. Jeff Merkley, D-Ore., and Ben Ray Luján, D-N.M., introduced the Stop Price Gouging in Grocery Stores Act, which would prohibit surveillance pricing in grocery stores and third-party delivery platforms.

Several states have moved faster than the federal government. Maryland became the first state to ban certain personalized pricing practices, enacting the Protection From Predatory Pricing Act in April, effective Oct. 1. New Jersey enacted a similar ban, the Fair Price Protection Act, in July. Connecticut passed a ban whose main provisions take effect July 1, 2027.

New York, which already has a 2025 law requiring businesses to disclose when prices are set by algorithms using consumers' personal data, passed a broader ban this year, the One Fair Price Act, that is awaiting Gov. Kathy Hochul's decision. Colorado's version passed the legislature but was vetoed by Gov. Jared Polis, who called it overly broad.